Corporate report

UKHSA Advisory Board: finance report

Updated 2 February 2023

Date: Tuesday 24 January 2023

Sponsor: Andrew Sanderson, Director General, Finance, Commercial and Corporate Services

Presenter: Andrew Sanderson

Purpose of the paper

The purpose of the paper is to give an overview of the UK Health Security Agency’s (UKHSA) finances as at month 8 financial year 2022 to 2023 (end of November 2022). At the time of submitting, the month 9 (end of December 2022) figures were being finalised.

Recommendation

The Advisory Board is asked to note UKHSA’s financial position.

Summary of in-year 2022 to 2023 financial performance

At end of November.

The table below shows resource and capital departmental expenditure limits, split by the 3 parts of:

• core agency costs
• coronavirus (COVID-19)
• vaccines and countermeasures, including the Covid Vaccine Unit (CVU)

It shows year-to-date budget and spending for April to November, and budget and forecast outturn for the full year.

Table 1: resource departmental expenditure limits (RDEL) and capital departmental expenditure limits (CDEL)

Figures shown reflect millions (£’m)

	Budget (year to date)	Actual (year to date)	Variance (year to date)	Budget (full year)	Outturn (full year)	Variance (full year)
Core RDEL	282	273	10 (3%)	454	428	27 (6%)
COVID RDEL	1,128	926	202 (18%)	1,906	1,765	141 (7%)
UKHSA RDEL	1,411	1,199	211 (15%)	2,360	2,192	167 (7%)
Core CDEL	42	40	1 (3%)	135	112	23 (17%)
COVID CDEL	0	(40)	40 (0%)	0	(202)	202 (0%)
UKHSA CDEL	42	(0)	42 (101%)	135	(89)	225 (166%)
UKHSA total (excluding CVU and VCR) RDEL plus CDEL	1,452	1,199	253 (17%)	2,495	2,103	392 (16%)
CVU*	1	468	(467(N/A))	5	472	(467 (N/A))
Vaccines and countermeasures response (VCR)	(221)	(221)	0 (0%)	88	88	0 (0%)
UKHSA total (including CVU and VCR)	1,232	1,446	(214 (17%))	2,588	2,663	(75 (3%))

*CVU programme budgets and transfer of balances has yet to be finalised.

Core resource budget

The agency’s core resource budget is shown net of external income; we are on track to generate £150 million of income. The trajectory on core spending has been below plan, and this was reflected in forecast underspends being reported in November. The current forecast is dependent on recruitment progress and there is a risk that further underspends will emerge.

Core capital budget

Capital spend was £40 million in the first eight months. The month 8 position showed a full-year forecast underspend of £23 million (17%). We have carried out an in-year prioritisation exercise to identify additional opportunities for capital, although feasibility remains limited. Re-accelerating £12 million in-year spend on Science Hub has been approved in order to help make faster progress in 2023 to 2024.

COVID-19 resource budget

So far this year we have released £375 million of COVID-19 testing budget and handed this back to the Department of Health and Social Care (DHSC) to help with wider pressures in the health group. This budget was released from the emerging underspend for the year due to lower cost and demand drivers than planned for within our testing programmes. As of November, these demand drivers have continued to decrease. In addition, there have been workforce savings within the COVID-19 testing laboratory network and a reduction in headcount across operational teams resulting in a further year-to-date underspend of £202m against the revised budget.

As of December, we were forecasting an underspend of £141 million by year end, reflecting a slower trajectory of increase in testing in December than budgeted for, and reductions in the NHS testing forecast. Winter demand has remained broadly in line with our medium planning forecast and our expectation is that demand is likely to fall in line with or quicker than our December forecast. We are able to manage the pressures on NHS testing, where volumes and costs have been higher than budgeted for over the year, within our total COVID-19 testing budget. The recent decision to stop polymerase chain reaction (PCR) testing at the Rosalind Franklin Laboratory will enable some further workforce savings to be made in 2022/2023.

COVID-19 capital budget

Forecast capital spend on COVID-19 is negative due to accounting treatment, as testing supplies which were purchased last financial year are used in 2022 to 2023. The conversion of the CDEL inventory credit into RDEL is being finalised but there is no longer an RDEL pressure to offset.

CVU

From 1 October 2022, the responsibility for purchasing COVID-19 vaccines has transferred into UKHSA as the CVU. To date, an admin budget transfer of £5 million has been agreed. DHSC are finalising the transfer of balances to UKHSA to begin reporting from month 10. The budget transfer for vaccine procurement for six months from October 2022 was submitted by DHSC as part of the Supplementary Estimates process (this is the annual exercise where Parliament authorises in-year adjustments to departments’ budgets). Final confirmation from HM Treasury is expected in January.

Vaccines and countermeasures

This budget is ring-fenced by DHSC and managed on the basis that UKHSA should neither gain nor lose; therefore, the budget is shown as equalling the expenditure.

Other financial issues

2021 to 2022 accounts

UKHSA’s first annual accounts are due to be published at the end of January. As previously reported to the Advisory Board, these have been highly challenging due to the unprecedented context of the pandemic and inherited system decisions. A plan is being put in place to address areas of concern, and this will be a top priority for UKHSA over the coming months.

Future funding

At the time of writing, decisions had not yet been made about UKHSA’s funding beyond March 2023. We continue to work closely with the DHSC on this. High inflation and wider pressures on the public finances mean it will be important for UKHSA to prioritise and drive value for money in order to achieve maximum impact on our health security objectives.

Andrew Sanderson
Director General, Finance, Commercial and Corporate Services
January 2023